The average revenue per user, or ARPU, is a key metric for companies in the subscription and billing management space as it helps to measure the average amount of revenue generated per user. For SaaS companies or for those in the subscription and billing management business, ARPU is a crucial metric to track, as it provides insight into the health of their business.
If ARPU is increasing, it means that more users are finding value in the product and are willing to pay for it. On the other hand, if ARPU is decreasing, it could be an indication that the product is not meeting users’ needs.
Again, a higher price point will not just lead to a higher ARPU, but it will also lead to a higher churn rate if users feel they are not getting value for their money. Conversely, a lower price point may result in more customers signing up, but those customers maybe less likely to spend money on extras or upgrades.
Therefore, a smart way to increase your ARPU is to increase your prices or offer more unique features that customers are willing to pay for. Thus, tracking ARPU is essential for all subscription-based businesses.
